An increase in the U.S. price level relative to the price level of U.S. trading partners will cause the aggregate expenditures function in the United States to
a. shift up.
b. shift down.
c. get flatter.
d. get steeper.
b
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Substitution effects help explain the slope of the aggregate demand curve. One substitution effect refers to the
A) inverse relationship between the interest rate and the price level. B) direct relationship between the interest rate and the real value of wealth. C) effect on investment expenditures that result from a change in interest rates produced by a change in the price level. D) change in wealth that results from a change in the interest rate.
A news story states that "Videotapes lose their appeal as consumers switch to DVDs for movies." In a competitive market for the purchase of videotapes of movies, this situation would lead to a(n):
a. Decrease in the price of videotapes and increase in the quantity sold b. Decrease in the price of videotapes and the quantity sold c. Increase in the price of videotapes and decrease in the quantity sold d. Increase in the price of videotapes and the quantity sold
Suppose that the own-price elasticity for yogurt is -0.6. Which of the following statement(s) is (are) true?
A) Raise the price of yogurt in order to increase revenue in the short-run. B) Lower the price of yogurt in order to increase revenue in the short-run. C) The own-price elasticity of Dannon Yogurt is likely larger than -0.6 (in absolute value). D) Both A and C
You're buying snacks for an Econ Club meeting. You've been given $100 to spend on chips and soda. You buy 25 bags of chips and 15 sodas. If bags of chips cost $3 each and soda costs $1 each, are you within your budget?
A. No, Over budget by $10 B. Yes, Under budget by $0 C. No, Over budget by $15 D. Yes, Under budget by $10